Consumers depend on passenger airlines to take them all over the world. Business travelers use airlines to take them to visit clients, negotiate business deals, purchase equipment, and much more. Personal travelers use airlines to go on vacations, visit family members, and so on.
A number of factors affect ticket prices for airline flights. Using the money that passengers pay for tickets, airlines must pay for the purchase or lease of airplanes and other equipment, fuel costs, maintenance, employee salaries, government taxes, terminal fees, and still leave enough to make their business profitable. Each of these factors can vary substantially. For example, the cost of airplanes can vary from year to year based on competition between airplane manufacturers and other economic factors. Fuel prices can vary based on the current price of oil, and major disasters such as hurricanes that affect the price of oil and refining capacity. Employee salaries can change based on strikes and contract negotiations. Government taxes on airlines often change, and may vary among countries thus affecting airlines that fly internationally. Airlines sometimes incorrectly balance these factors and undergo bankruptcy or other business reorganizations that affect the price charged for tickets.
In addition to each of these factors, competition among airlines is often intense, leading to fare wars in which one airline attempts to fill seats by undercutting the prices of each of the other airlines servicing a particular route. Moreover, unexpected events may affect the demand for a particular route. For example, a sports team may make it into the playoffs leading to an increase in flights by fans wanting to attend the playoffs. Similarly, a dignitary such as the Pope or President may announce a visit to a particular city, leading to an increase in flights to that city by those that want to see the dignitary. There are also seasonal demands for purchasing airline tickets, causing an increase in ticket purchases around holidays such as Thanksgiving and Christmas. Route changes may also affect demand. For example, an airline may stop servicing an unpopular route. This leaves fewer carriers servicing that route and can lead to a situation where one carrier has a monopoly on that route such that prices increase.
All of these factors affect the price of the ticket charged to consumers. Price fluctuations in airline ticket prices are very common, making purchasing tickets for an airline flight a daunting task. It is difficult for a consumer to determine the best time to purchase a ticket to get the best price. A consumer may purchase a ticket one day only to find out that a fare war has begun the next day leading to a large drop in the ticket price. However, if the consumer waits to purchase the ticket the ticket may increase in price. This may cause the consumer to spend more than they intended or to cancel the trip altogether. A lack of confidence in ticket prices negatively affects consumer spending for airline tickets and frustrates consumers.